Do unrealistic expectations lead to unsettled malpractice lawsuits?

Television commercials touting plaintiff lawyers routinely promise lucrative settlements in medical malpractice cases. As it turns out, unrealistic expectations decrease the likelihood that cases will be settled before going to trial, according to new research from Rice University.

“Bargaining with Optimism: Identification and Estimation of a Model of Medical Malpractice Litigation,” authored by Rice economists Antonio Merlo and Xun Tang, examines empirical data from 6,405 malpractice cases in Florida between 1984 and 1999 that were either settled or resolved by trial. It will appear in an upcoming edition of the International Economic Review.

The researchers found that patients (plaintiffs) tended to be more optimistic, while doctors (defendants) were more pessimistic in cases involving severe injuries or deaths. The researchers also discovered a correlation between serious injuries and the expectations of parties in lawsuits. Patients were more optimistic and doctors were more pessimistic depending on the severity of injuries.

The study also found evidence that both sides share a misconception about how doctors’ qualifications might affect the outcome of a lawsuit. If a doctor seemed better qualified on paper – for example, if he was board certified– patients tended to think they were more likely to win in court. But data showed the opposite is true: The probability of a verdict for the plaintiff is more likely if the doctor is not certified.
Meanwhile, despite that data, board-certified doctors were more pessimistic on that question than their counterparts who weren’t certified.

“Given the increased demand for evidence-based policy at the national, state and local levels, we hope that the study will provide empirical results to inform the policy debate currently going on in many states on tort reform,” Tang said.